In a Proportionate Current (Nonliquidating) Distribution of His 30% Interest

question 228

Essay

In a proportionate current (nonliquidating) distribution of his 30% interest in the MNO LLC, Neil received cash
($60,000), land (basis of $40,000 and value of $75,000), and unrealized receivables (basis of $0 and value of
$22,000). In addition, Neil is relieved of his $40,000 share of the LLC's liabilities. Neil's basis in MNO (including his share of LLC liabilities) was $80,000 immediately prior to this distribution.

a. How much gain or loss does Neil recognize on this distribution?
b. What is Neil's basis in the receivables and land he receives in the distribution?
c. What is Neil's basis in the LLC interest following the distribution?

Analyze the role of education in social reproduction and the maintenance of social inequalities.

Understand the contractual obligations and potential breaches within accountant-client relationships.

Recognize the regulatory environment governing accountants, including oversight bodies and legal liabilities under various securities acts.

Comprehend the professional standards and liabilities associated with negligence and professional conduct in accounting.

---

Definitions:

Required Return

The minimum return an investor expects to achieve by investing in a particular asset, taking into account its risk level.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, representing the interest an investor would expect from an absolutely risk-free investment over a specified period.

GDP

Gross Domestic Product, a measure of the economic performance of a country, representing the total value of all goods and services produced over a specific time period.

Asset Return

A measure of the earnings generated by an asset over a particular period, often expressed as a percentage of the asset's initial cost.